Amazon Prime Lite to bring in ad revenue, boost Prime Video subscriber base

Amazon India has announced a new subscription plan, Prime Lite. Priced at Rs 999 per annum, it's an affordable alternative to the regular Prime membership, which is priced at Rs 1,499.

Apart from shopping benefits, Prime Lite members can stream unlimited content on Prime Video. However, it allows customers only two streaming devices in HD quality. More importantly, with this, Prime Video is introducing its ad-supported tier. 

Although its sports coverage already comes with ads, this will be the first time other content on Prime Video, will feature ads.

While there's a difference of only Rs 500 between the Prime Lite and regular subscription, in a price-sensitive market like India, it can make a significant difference. Karan Taurani, senior vice president, Elara Capital, says that the strategy may augur well to drive Prime subscriber growth. 

"This will have some sort of a positive impact, as it could lead to growth in the subscriber base. It's an innovative strategy."

However, Taurani cautions that it could also lead to a lower average revenue per user (ARPU), as it could lead to downgrades.

"The prime subscriber could move to Prime Lite. The existing subscribers may downgrade the plan and move to Prime Lite, if they aren't making use of all the services. While incremental subscriber growth will be strong, it may also be ARPU dilutive."

According to a Media Partners Asia report, Prime Video had an estimated 21.8 million subscribers in India last year. As per the report, India’s AVoD streaming market is poised to touch $2.4 billion by 2026, while the SVoD market will be worth $1.8 billion.

With subscriber growth slowing down in the streaming industry, OTT platforms are increasingly looking at ad revenue. Ad-supported tiers, help in boosting the ARPU. Last year, Netflix also announced that it's exploring an ad-supported tier.

In November 2022, Prime Video launched a single-user, mobile-only version in India, for Rs 599 a year. The new Lite plan sits perfectly between the mobile plan and the regular Rs 1,499 plan. 

“As the Indian population increasingly adopts CTV viewing, the new Amazon Prime Lite plan, addresses the steep gap in pricing between the current Rs 599 mobile-only plan and Rs 1,499 all access annual plan. At 33% discount, the newly introduced Rs 999 plan, not only allows Prime Video to extend its total addressable market (TAM), but also introduces a new avenue for monetisation through ads," shares Mihir Shah, vice president, Media Partners Asia.

Taurani says that the need of the hour, is to move towards a market where there's differentiated pricing for varied customers.

"India is a huge market and the audience behaviour is quite different. While some want to consume videos, some only need the prime delivery and others want to consume all these services. That's why multiple bundles are being created."

Media reports suggest that the discussions around the ad tier, have been going on for several weeks now. 

A Wall Street Journal report suggests that Amazon was in discussions with Warner Bros. Discovery and Paramount Global about adding ad-based tiers of their streaming services through Prime Video channels.

In January, afaqs! reported that Amazon was testing the Prime Lite service in India.

During Goafest last month, Amazon India revealed that it was beta testing miniTV on the paid video streaming platform. miniTV is an ad-supported service, currently featuring only on its e-commerce platform. With its full roll out, it will also bring in ads on the streaming service.